[100 Days of the Financial Consumer Protection Act] Expert: "Consumer Benefits Undermined... Could Become Regulation for the Sake of Regulation"

Confusion in Financial Sector Raises Experts' Concerns
"Increasing Formal Procedures Could Cause Major Issues"
"Policy Research Needed for Substantial Protection"

Bank counter reference image (Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] "The Financial Consumer Protection Act may actually harm the benefits of financial consumers." "We need to reorganize before the side effects become entrenched."

Experts have voiced unanimous concerns regarding the confusion arising in the financial sector since the implementation of the Financial Consumer Protection Act (FCPA).

Professor Sung Tae-yoon of Yonsei University's Department of Economics said in a phone interview on the 30th, "The increase in excessively inefficient and formal procedures that do not significantly help consumer protection is definitely a big problem," adding, "Instead of maintaining long and cumbersome consent procedures, there is a need for policy research that can effectively protect financial consumers."

Complaints from the front lines of the financial sector align with these criticisms. A representative from a commercial bank said, "For sensitive fund products, nearly 100 pages of documents must be produced to complete the subscription process," revealing, "While the bank is responsible, consumers find it very inconvenient, and most do not look at the details and just discard them." Another commercial bank official lamented, "Some customers even question who these regulations are really for."

Regarding this phenomenon, Research Fellow Lee Sung-bok of the Korea Capital Market Institute stated, "With the expansion and establishment of regulations, financial consumers experience procedural inconveniences, and financial companies have been observed to shift some regulatory costs to customers by encouraging the use of non-face-to-face channels." He pointed out that it is difficult to determine whether the suitability principle or disclosure obligation regulations are applied or complied with in non-face-to-face channels.

Research Fellow Lee expressed concern, saying, "If financial consumers cannot easily distinguish between product advertising, searching, recommendation, brokerage, and direct sales in non-face-to-face channels, it may be difficult for them to assert their rights."

Experts warn that if the issues in the field are not promptly resolved, the FCPA could degenerate into a 'regulation for regulation's sake,' completely losing its purpose and effectiveness.

"A 'Reverse' Approach Needed to Prevent Side Effects"

An official from the financial sector involved in preparing guidelines for financial companies following the FCPA implementation emphasized, "There are regulations or items that are clearly inconvenient and inefficient but impossible to overcome," adding, "In such cases, authorities need to provide some leeway for more flexible interpretation and discretion."

The official also said, "If the process so far has been a 'forward' procedure to induce compliance with regulations, going forward, a 'reverse' approach is needed to reorganize and resolve side effects or difficulties identified in the field."

Senior Research Fellow Lee Kyu-bok of the Korea Institute of Finance argued in his report titled 'Tasks to Strengthen the Effectiveness of Financial Consumer Protection in the Process of Settling the FCPA' that "Currently, financial supervisory authorities respond by answering inquiries from financial companies, but they should take a more proactive perspective by analyzing product sales cases and the market and suggesting improvements."

He also advised, "While sufficiently reflecting the differences in various sales channels (face-to-face and non-face-to-face), a regulatory system should be developed to ensure that no differences arise in the level of regulation."

This content was produced with the assistance of AI translation services.